Martha Stewart has been on a roll. A veritable Energizer Bunny, even while purportedly constrained by house arrest, she has lined up numerous TV programs, radio programs, new product agreements, book contracts, and generally thrust herself back into the bosom of Martha Stewart Omnimedia.

Yet, her company’s stock, having staged a remarkable get-out-of-jail-free recovery, languishes. From a high reached earlier this year of $37, the stock was trading yesterday at about $26. Even so, numerous investors who are short the stock continue to whine about its gravity-defying performance when, they say, the stock remains ludicrously overpriced.

Several issues in particular provoke these naysayers – but none more than the deal in which the company handed over to Mark Burnett, TV producer extraordinaire, up to 5% of the company.

Mr. Burnett is the reality TV guru who has been hired as co-executive producer (along with Donald Trump) for “The Apprentice: Martha Stewart.” He is also involved with the production of the new daytime show “Martha,” which in effect takes the place of “Living,” which was canceled last year for obvious reasons.

In the company’s 2004 annual report, management reported that it had issued to Mr. Burnett warrants to purchase up to 2.5 million shares of MSO, at the market price at the date of signing of $12.59 a share. With about 50 million shares outstanding when the deal was concluded, the potential dilution is 5%.

The recently released second-quarter earnings statement showed, for the first time, just how expensive it was to hire Mr. Burnett. The second quarter contained a charge of $16.8 million related to the vesting of warrants issued to Mr. Burnett, accounting for about half the quarter’s operating loss.

This figure is the cost ascribed to the warrants under GAAP accounting, which requires Black Shoals valuation of the grants. Further charges, of about $9 million in each of the next two quarters, and a further hit in 2006, have been predicted by management. The timing, and the amount, will be in part determined by the progress made on yet another TV show, likely to be announced in 2006.

Some critics argue that doling out such a large amount of stock to Mr. Burnett is outrageous, and charge that the agreement benefits Stewart more than the company.

While Mr. Burnett’s services were likely vital to making Martha’s “Apprentice” show a reality, hiring him seems way over the top for the daytime show, which is in effect taking over from a highly successful predecessor. After all, “Living,” the long-running daytime show that first put Stewart in everyone’s living room or, um, kitchen, garnered a remarkable 60 Emmy nominations in its 16 seasons.

Just this past spring it won its sixth Emmy (in the “creative craft” category – how many entrants were there, you may wonder?). In other words, the art of producing a daytime TV show seems to have been pretty well mastered by the MSO crowd – did they really need Mr. Burnett?

The sticky point is that, according to the annual report, “MSO will not have a direct financial interest in the primetime program.” Though the company is quick to point out that MSO products will be highlighted on the set of the show, some investors feel that in effect the company is issuing stock to Mr. Burnett in order to secure prime-time visibility for Stewart, benefiting her personally.

The reality is that it is almost impossible to separate Martha Stewart the person from Martha Stewart the brand. Such confusions are absolutely to be expected, according to a corporate governance expert and editor at the Corporate Library, Nell Minow.

“Martha Stewart controls the voting shares of the company, which is the worst possible situation for shareholders and the best possible for Martha. She gets access to the capital markets and still retains control. She has trouble distinguishing between public and private issues.” According to Ms. Minow, such situations are all too common in companies that have been built and are still controlled by an individual.

The best safeguard for shareholders would be, of course, an independent board. Some of her critics unhappily point to some shortfall in this arena, too. The fellow who recently assumed the job of board chairman, Charles Koppelman, has been a consultant to MSO and apparently will continue in that role.

Again, company spokesmen and spokeswomen see it differently. Mr. Koppelman has been helpful in numerous initiatives, such as the new Sirius radio contract, and in strategic planning. In their view, compensation is entirely in order.

At the end of the day, the company will have to earn its way to a higher share price, something the skeptics consider highly unlikely, citing the fragile state of the Martha brand. Banking on Martha’s ability to trump Donald Trump is certainly not a comfortable basis for an investment. However, her track record is extraordinary, and her fans legion. One thing is for sure – fans and critics alike will be tuning in to see who becomes Martha’s apprentice. That alone could make it a hit show.